Bank Of England Governor Defends QE, Says UK Recovery Off-Track

Problems in the eurozone and a slowdown in the global economy
have thrown the U.K. economic recovery off-track according to
Bank of England governor Mervyn King,
Financial Times reported.

King defended the Bank of England's decision to resume
quantitative easing. The BoE had announced an additional
£75 billion in QE earlier this month because of the
sluggishness in the U.K. economy.

While consumer
price inflation rose to 5.2% on an annual basis, the BoE's
monetary policy committee has warned that inflation would rise to
over 5% because of pre-announced hikes in utility prices. But
said,
"...inflation is likely to fall back sharply next year as the
influence of the factors temporarily raising inflation diminishes
and downward pressure from unemployment and spare capacity
persists."

He also warned that time was running out to solve weakness in
banks and sovereign balance sheets. Via
Bloomberg:

“A transparent recognition of losses and a substantial injection
of additional capital are necessary to restore market
confidence.”